© Reuters. FILE PHOTO: The brand of Tyson Foods is seen in Davos, Switzerland, May 22, 2022. REUTERS/Arnd Wiegmann/File Photo
By Granth Vanaik and Tom Polansek
(Reuters) -U.S. meatpacker Tyson Foods (NYSE:) on Monday forecast income for its subsequent fiscal yr beneath Wall Street estimates after fourth-quarter gross sales missed expectations as a result of falling hen and pork costs and slowing demand for its beef.
Shares slid 2.5% in premarket buying and selling.
With greater meals costs and rates of interest pressuring family budgets, some American shoppers have been reducing again on meat purchases.
Prolonged headwinds, comparable to declining U.S. cattle herds as a result of a lingering drought, have additional strained margins for meals corporations.
Tyson mentioned gross sales volumes in its beef enterprise, its largest unit, fell 6.7% within the quarter ended Sept. 30, whereas costs rose by 10.2%. The firm’s prices to purchase cattle to course of into beef elevated by about $2.1 billion in fiscal yr 2023 from the earlier yr.
Tyson, the largest U.S. meat firm by gross sales, mentioned its beef unit can have an adjusted working lack of between $400 million and breakeven as a result of tight U.S. cattle provides in fiscal yr 2024.
“Guidance was well below the street across production segments,” Bernstein analysts mentioned.
Chicken gross sales volumes rose 1.7% within the newest quarter as prospects switched to cheaper options from high-end proteins, although costs dropped 9.2%.
The firm expects complete gross sales to be flat in fiscal 2024 from the earlier yr’s $52.88 billion. Analysts on common anticipate gross sales of $54.40 billion, in keeping with LSEG information.
Tyson’s fourth-quarter gross sales fell 2.8% to $13.35 billion, beneath analysts’ estimates for $13.71 billion. Adjusted income have been 37 cents per share versus analysts’ expectations for 29 cents.
Tyson has been reducing jobs and shutting U.S. hen processing vegetation to regulate prices, and sources mentioned in August the corporate was planning to promote its China poultry enterprise.
Chief Financial Officer John R. Tyson mentioned in an interview on Monday that it’s “business as usual” in China. When requested whether or not the meatpacker will shut extra U.S. vegetation, he mentioned “we continue to evaluate everything”.
Tyson employed about 114,000 employees in U.S. meat vegetation and different non-corporate websites like warehouses as of Sept. 30, down 3% from a yr earlier, and 19,000 employees in different international locations, up about 6%.